4 - Supply Chains

Question 1

What Is A Supply Chain?

Answer 1

The sequence of processes required for the production and distribution of a good or service to the customer.

Question 2

How Do Businesses Choose Its Suppliers?
(5 Points)

Answer 2

~ Price the supplier charges.

~ Quality a suppliers gives.

~ Predictability, reliability and flexibility.

~ Speed.

~ Payment terms.

Question 3

What Is Flexibility?

Answer 3

Ability to respond to change.

Question 4

What Happens If A Business Does Not Meet Supply?
(3 Points)

Answer 4

~ Loss of sales.

~ Customers go to rivals.

~ Reputational issues

Question 5

What Are The Ways A Business Can Manage Supply?
(3 Points)

Answer 5

~ Hire temporary employees.

~ Purchase to order.

~ Outsourcing.

Question 6

How Does Hiring Temporary Employees Help Manage Supply To Demand?

Answer 6

Hire them on short term contracts, ensuring that the business efficiently meets demand.

Question 7

What Are The Benefits Of Hiring Temporary Employees?
(3 Points)

Answer 7

~ Flexible workforce.

~ Better able to match supply to demand.

~ Only pay workers when they work, as they are not working full time.

Question 8

What Are The Drawbacks Of Hiring Temporary Employees?
(3 Points)

Answer 8

~ Recruitment costs associated.

~ Lower commitment and productivity.

~ Lack of skills and experience.

Question 9

How Does Purchasing To Order Help Manage Supply To Match Demand?

Answer 9

Production starts once the order has been received from the customer.

Question 10

What Are The Benefits Of Purchasing To Order?
(3 Points)

Answer 10

~ Helps manage stock levels.

~ Less storage costs and reduced waste.

~ Allows for bespoke and customised products.

Question 11

What Are The Drawbacks Of Purchasing To Order?
(3 Points)

Answer 11

~ Requires high levels of flexibility.

~ Depends heavily on suppliers.

~ Struggle to meet unexpected surges in demand.

Question 12

How Does Outsourcing Help Manage Supply To Match Demand?

Answer 12

Contract a business process to an external provider, to meet demand in a cost efficient manner.

Question 13

What Is Outsourcing?

Answer 13

Contracting a business process to an external provider.

Question 14

What Are The Benefits Of Outsourcing?
(4 Points)

Answer 14

~ Using specialists, offer a higher quality than if the business did it.

~ Lower costs, don’t have to employ full time labour also increases profit margins as costs have not reduced.

~ Don’t need to do capital investment, leads to higher cash flow.

~ Can focus on the businesses core competency, eliminates any unnecessary distractions.

Question 15

What Are The Drawbacks Of Outsourcing?
(4 Points)

Answer 15

~ Loose control of that business process.

~ Could lead to quality issues, if they do they work to the bare minimum.

~ The ethics of the external provider could affect the businesses reputation.

~ Leads to over reliance on the external provider, links to porters 5 forces as it increases supplier power.

Question 16

What Is Mass Customisation?

Answer 16

The use of computer aided manufacturing (CAM) to produce individually tailored output to customers on a large scale.

Question 17

What Are The Benefits Of Mass
Customisation?
(4 Points)

Answer 17

~ Increased operational flexibility, to better meet customer needs.

~ Eliminate middle man, as you need closer communication with end customer.

~ Less waste as not stock is held.

~ Stimulating work environment, more diverse tasks for employees.

Question 18

What Are The Drawbacks Of Mass
Customisation?
(4 Points)

Answer 18

~ Requires CAM, increased costs for use.

~ Less scope for EOS, due more use of different components this varies supplier costs.

~ More waste, specific to customer needs if they don’t like it they might reject it.

~ Slower response speed, as they have to wait for it to be produced.

Question 19

What Will The Amount Of Stock Held Depend On?
(4 Points)

Answer 19

~ Businesses attitude to risk.

~ Importance of speed or response as an operational objective.

~ Speed of change within a market.

~ Nature of the product.

Question 20

What Does An Inventory Control Chart Look Like?

Answer 20

Question 21

What Is The Buffer Stock Level Of Inventory?
(3 Points)

Answer 21

~ Stock held by a business to cope with unforeseen circumstances.

~ When a business reaches its minimum inventory level it is left with just buffer inventory.

~ J-I-C.

Question 22

Draw Buffer Level Of Inventory On The Inventory Control Chart

Answer 22

Question 23

What Is Lead Time?

Answer 23

Time it takes between placing an order and receiving the delivery.

Question 24

Draw Lead Time On The Inventory Control Chart

Answer 24

Question 25

What Must You Know To Be Able To Calculate Lead Time?

Answer 25

Re-order level.

Question 26

What Is Re-Order Level?
(2 Points)

Answer 26

~ The level of inventory which triggers an order.

~ Determined by lead time and the minimum inventory level.

Question 27

Draw Re-Order Level On The Inventory Control Chart

Answer 27